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Edison International (EIX) Up 12.3% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Edison International (EIX - Free Report) . Shares have added about 12.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Edison International due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Edison International Q3 Earnings Lag, Revenues Down Y/Y

Edison International reported third-quarter 2019 adjusted earnings of $1.49 per share, which missed the Zacks Consensus Estimate of $1.53 by 2.6%. The bottom line deteriorated from the year-ago quarter earnings of $1.56.
 
Excluding adjustments, quarterly earnings came in at $1.35 per share from continuing operations compared with $1.57 in third-quarter 2018.

The year-over-year bottom-line decline can be attributed to lower revenues as well as operating income.

Total Revenues
 
Edison International's third-quarter revenues totaled $3.74 billion, which missed the Zacks Consensus Estimate of $4.28 billion by 12.7%. Also, the top line declined 12.4% from the year-ago quarter’s figure of $4.27 billion.
 
Segment Results

Southern California Edison’s (SCE) third-quarter adjusted earnings came in at $1.59 per share compared with $1.62 a year ago. The downside can be primarily attributed to increase in shares outstanding related to the equity offering in July 2019 and higher wildfire mitigation expenses.
 
The Parent and Other segment incurred an adjusted loss of 9 cents per share in the quarter under review compared with the year-ago quarter’s loss of 6 cents. The wider core loss was mainly due to higher interest expense as a result of increased borrowings.

Financial Update

As of Sep 30, 2019, Edison International's cash and cash equivalents amounted to $547 million compared with $144 million as of Dec 31, 2018. Long-term debt was $17.07 billion, higher than the 2018-end level of $14.63 billion.

Net cash outflow from operating activities during the first nine months of 2019 was $817 million against cash inflow of $2,271 million in the prior-year period. Total capital expenditures totaled $3,497 million at the end of the third quarter, up from $3,241 million a year ago.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

VGM Scores

At this time, Edison International has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Edison International has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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